Paper Abstracts:

“Bridging the Gap: Evidence from externally hired CEOs”Journal of Accounting Research (2018) (SSRN, JAR)(with Yonca Ertimur, Jonathan Rogers, and Sarah Zechman)
“We investigate executive employment gaps (hereafter, gaps) between the appointment of an external CEO at a public firm and the individual’s prior executive position at a public company. These gaps cannot be reliably obtained from common databases. We hand‐collect data for externally hired CEOs at public companies from 1992 to 2014. These CEOs represent approximately 40% of the 5,095 CEO successions and have a mean gap of 1.9 years. The gap increases to 3.2 years for the subset of new hires with a gap. We hypothesize that labor market frictions and executive skill sets contribute to the existence and length of these gaps. Using theories from labor economics, we predict (equilibrium) associations between two measures of “fit” (executive compensation and long‐term match quality) and gaps (both existence and length). Finally, we provide descriptive evidence on what executives do (e.g., sit on boards, work for private consulting companies, or consume leisure) during their gaps. This project was subject to and published through a registered report process. Any tests that were not included in the accepted proposal are marked as unplanned analyses.”

“Overconfidence and Proprietary Investment Disclosure”
R&R at Contemporary Accounting Research (2019) (SSRN)“This paper investigates the role of idiosyncratic CEO traits in proprietary disclosure decisions. I analyze narrative R&D disclosures in the 10-K and find evidence that they have notable proprietary costs associated with their disclosure. Specifically, managers provide fewer R&D disclosures when firms face more significant competition and, consistent with information spillovers, firms’ underlying return on R&D is significantly lower in the presence of high R&D disclosure. Next, I examine CEO overconfidence and find that firms with overconfident CEOs have significantly more narrative R&D disclosures. Using a novel approach examining verb tenses, I identify R&D disclosures that are more likely to contain propriety information (i.e., disclosures about current and future R&D activities) and find that the association between overconfidence and R&D disclosure is stronger for more proprietary disclosures. Further, the association between R&D disclosure and the return on R&D remains consistent after controlling for overconfidence. Finally, I find no evidence that CEO overconfidence is associated with nonproprietary disclosure. These results suggest that CEO overconfidence is associated with lower perceived costs of proprietary disclosure, leading to more voluntary disclosure of proprietary information.”

“Disengaged Owners and Financial Reporting: Evidence from Index Funds“SSRN Working Paper (2019) (SSRN)(with Stephen Rowe)“Index funds are an increasingly important part of the U.S. stock market with the average S&P 1500 company having 22% of their equity held by index funds in 2018 (compared with 10% in 2011). Building on concurrent research finding that index funds engage less with portfolio firms than other investors, we expect firm-level index fund ownership to be associated with systematically different financial reporting decisions by firms. Using fund-level stock holdings, we examine the association between index fund ownership and financial reporting myopia. Consistent with less myopia, we find that greater index fund ownership is associated with a greater frequency of missing earnings, fewer abnormal accruals, and less obfuscation in financial reports (i.e., more readable, more negative, and more specific disclosures). Additional analyses provide results consistent with this effect being due to lower engagement by index funds and not higher oversight.”